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We know the total days taken last year is 16x5=80. We must find the new total days now.
(1) is not enough as we have no information as to how many vacation days were taken by the 3 that had an increase or the 2 that had a decrease. Don't be misled by the average being 16 and assume that they all took 16. As we dont know, we dont know what absolute number effect these changes will have, and this question is all about absolute numbers.
(2) This is better, we have absolute numbers. If as you say the OA is B, then there is clearly a typo either on your behalf or theirs as we are only told about 4 employees' absolute change and nothing of the 5th. For the answer to be B, one of the "2's" has to be a "3".
Assuming it is written correctly, then we have to consider C before E. We see that for those that increased to be a "50% increase", the two must have gone from 20->30, and the other two from 10->5 for it to be a 50% decrease. Therefore the remaining worker started with (80-20-20-10-10=)20 days, and increased 50% (as 3 workers increased) to 30, and so the answer is (C).